Staying calm: Better to avoid knee-jerk response to macro indicators

Knee-jerk reactions, or over-reactions, will be even more dangerous

There is no denying that the Indian economy is showing a few red indicators on its macro-economic dashboard. The perennial pressure point, crude oil prices, is once again having multiple negative effects across the board. Fiscal targets look in danger of being missed. The external account deficit has touched 2.4 per cent of gross domestic product and is pushing up towards 3 per cent (though will hopefully stop short of that mark). Inflationary prospects hover on the horizon. The yield on long-term government debt has risen, and its spread with the overnight repo rate has widened dangerously in consequence. There